Are we seeing a market impact with the new pension retirement options?
Over the past few weeks, I have had several industry people ask me how employers are reacting to the announcements made in the Budget last month, in particular, in relation to the withdrawal since 27 March of the need for retiring staff to buy an annuity.
There seems to be the feeling that enough time has now passed for some reaction to have emerged.
Well, there has been reaction from lobby groups asking for clarification and adaptations to make the new rules more workable. But from employers, we are not hearing much to date.
The reality is that those employers which already offer good financial education to staff will continue to do so. The workshop leaders and face-to-face advisers will simply be giving different information and advice with no extra work or cost to the employer.
Those employers which totally wash their hands of any pre-retirement education will not even be bothering with this.
The middle group, those that think they should do something but currently do not, or cannot, are the one most likely to change eventually. They may be aware it is a good idea. Or they may think the promised free government financial guidance for defined contributions will be enough (Hands up all those who think £20 million over two years to get this information out to all retirees will provide more than an online service? Hmmm, not many hands there then).
What is more likely to spur this group on, is either: the risk that an employee is not made aware of their choices at retirement by their employer and threatens legal action. Or, the employer needs to move on older workers who really want to retire and cannot.
The new flexibilities announced in the Budget now allow HR greater scope to use existing flexible retirement laws in conjunction with this great pensions flexibility to come up with solutions to suit employer and employee.
But I suspect that for many, this will not be implemented until the first ‘problem’ potential retiree emerges. Then it will have to be done in a hurry.
In the meantime, we will see loads of comment from the pensions industry while employers get on with their day jobs.